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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Tuesday, 18 March 14
SECOND QUARTER SUB-BIT FOB INDONESIA COAL SWAP LOST 3.27% IN A MONTH
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 gained this pa ...
Tuesday, 18 March 14
NEWCASTLE COAL EXPORT VOLUME FALLS 26.23% WEEK ON WEEK
COALspot.com: In the week ended 17 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Monday, 17 March 14
API 8 CFR SOUTH CHINA COAL SWAPS FOR AVERAGE Q2 14 DELIVERIES LOST 2.59% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 2.59 percent month on month and closed at US$ 74.15 per mt as o ...
Sunday, 16 March 14
BDI DOWN ON LOW CAPESIZE ACTIVITY
COALspot.com: The freight market was slightly soft this week with BDI down by 4.28 pct week on week. The BDI closed at 1,477 points and the cape ...
Friday, 14 March 14
DRY BULK MARKET ENTERS RECOVERY MODE, ON INCREASED CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has entered and sustained higher ground as of this week, on the back on increased Capesize demand. Although the situation in ...
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- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- MS Steel International - UAE
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- The University of Queensland
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- ASAPP Information Group - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
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